What is Hedge Fund Marketing?

Geri Terzo
Geri Terzo
An attorney or prime broker may be hired to market a hedge fund to new potential investors.
An attorney or prime broker may be hired to market a hedge fund to new potential investors.

Hedge fund managers can be an extremely private group who do not willingly disclose information about their investment styles or strategies. Even when it comes time to raise money for a new hedge fund, some of the most distinguished firms will inform an existing client base about a new portfolio that is being formed in an attempt to generate investment funds. There are some hedge funds, however, that are dependent on hedge fund marketing, which is the communication of a new firm or a new portfolio or fund that is being developed. These firms could be smaller in nature or managed by emerging managers who have not yet made a name for themselves.

Investors who choose hedge funds are willing to pay high fees in order to earn the types of returns that these investment vehicles produce.
Investors who choose hedge funds are willing to pay high fees in order to earn the types of returns that these investment vehicles produce.

Hedge fund marketing will differ from fund to fund. It could represent a time period in which internal representatives of a firm, including the portfolio managers, go out into the investment community and tout the new fund or firm. This also could be a function of a third party employed by a hedge fund, such as an attorney or a prime broker, which serves as a lending institution to hedge funds for investment purposes. During this time, the professionals personally meet with potential investors and outline the prospects of the new hedge fund firm or individual fund. Hedge fund investing requires large sums of money for upfront investments, and there is a significant amount of communication — both written and verbal — that is required in order to justify the financial commitment.

Another form of hedge fund marketing can be achieved over the Internet. There are hedge fund databases that are devoted exclusively to marketing hedge fund opportunities. These online databases will include the name of a hedge fund and members of the portfolio management team, along with contact details. There also is a description of the newly formulated fund that will outline the planned investment strategy. For instance, a synopsis could explain a new fund that will focus on an event-driven investment strategy and therefore will attempt to capitalize on major events that unfold in the financial markets, such as mergers or acquisitions.

Part of the hedge fund marketing process also will include detailing the anticipated size of a new hedge fund portfolio. These details are part of the education process that makes hedge fund investing a more engaging process for the investor. Although investment returns can not be predicted, all hedge funds are designed to perform better than the broader financial markets. After the necessary investments for a new fund have been obtained, the hedge fund marketing phase will come to a close.

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    • An attorney or prime broker may be hired to market a hedge fund to new potential investors.
      By: NAN
      An attorney or prime broker may be hired to market a hedge fund to new potential investors.
    • Investors who choose hedge funds are willing to pay high fees in order to earn the types of returns that these investment vehicles produce.
      By: Jasmin Merdan
      Investors who choose hedge funds are willing to pay high fees in order to earn the types of returns that these investment vehicles produce.